Ch. 8 - Segmenting and Targeting Markets

        The last chapter I will be posting this semester, focus on segmentation (geographic and demographic) and business target marketing. Food with integrity is Chipotle’s commitment to finding the very best ingredients raised with respect for the animals, the environment and the farmers.

A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards. Chipotle competes in a category of dining labeled, "Fast-Casual", the fastest growing segment of the restaurant industry. It takes the fast from fast-food, the quality and ambiance of casual dining, while keeping a focus on health and freshness. In addition having an average ticket price below $10. Chipotle's three target markets Local Market Commuting Workers and Tourists Commercial Events Segmentation The division of a broad market into similar products and brands. The main target or segment of Chipotle's "Food With Integrity" advertisement is 18-34 year olds with at least a Bachelor's degree. This group belongs to the upper middle class in the 'mass affluent´ segment in households with an average income of $75,000-$99,000 if only one person and $100,000-$149,000 if more than one adult lives in the household. Living in a household under these conditions allows the younger portion of this age segment to be a part of the upper middle class through their families. 

There are two distinct Groups to Chipotle's Segmentation:

- "Grubbers" 

- "Health Nuts" Chipotle's Demographics:

- 59.7% Female And 40.3% Male

- Between The Ages of 18-24

- 82% Caucasian 

-44% Are College Educated

-69% Have No Children

• Psychographics:

- Environmentally Conscious

- Active Lifestyle 

- Socially Focused 

- Tech Savvy 

- Image Conscious 

- Financially Unfocused Positioning The process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products. Positioning Chipotle shies away from traditional media which in return younger audiences think that chipotle is authentic and down to earth. Word of mouth Chipotle focuses on "Fast Casual" Dining 

Some competitors in this market are:

- Qdoba Mexican Grill

- Moe's Southwest Grill

-Panera Bread 

Target Markets: 

- Local Market

- Commuting Workers and Tourists

- Commercial Events Segmentation: The main segment is 18-34 year olds in the upper middle class Positioning: Commitment to "Food with integrity" and word of mouth advertising draws the younger audiences in. In turn, this has helped instill the value of their company into the mind of their consumer’s. 

Ch. 11 - Developing and Managing Products

     Chapter 11 talks about developing and managing a new product. Chipotle hasn’t had any major changes on the menu in almost 20 years. The fast-casual chain announced the first-ever min the beginning of the year, a major addition to its menu: Sofritas, a meatless protein, that will be used to make vegan and veggie burritos and tacos. Chipotle describes the meal base as organic tofu that’s shredded and braised with chipotle chilis, roasted poblanos and spices. 

As we analyzed on the previous chapter, the add of Sofritas on the menu gives a prime example of a product idem added to the existing product line, which are the other types of protein available to complement the burritos and tacos. It can also be analyzed as a simultaneous product development, which is a different product with the same assets.

Many investors see Chipotle Mexican Grill as one of the more-successful growth stories in recent memory. The company's stock performance confirms as much; the shares have risen approximately 1,300% since Chipotle's IPO in 2006, over 1,000% in the last five years, and over 80% in the last year alone.

However, investors would make a huge mistake to write off Chipotle as merely a once-great investment. In reality and despite its formidable size, Chipotle remains in a high-growth phase. This becomes most evident when viewed in combination with the company's store expansion, which investors should best consider alongside the company's two new restaurant brands.

Ch. 12 - Services and Nonprofit Organization

       On chapter 12, Service is the most important topic. It shows the components that costumers seek for quality services along with other strategies to create better experience overall. Chipotle offers better-than-average pay for the employees in the fast food industry and offers managers lucrative financial incentives for hiring quality people - and firing those who aren't up to snuff. As a result, Chipotle has a reputation for good service that far exceeds its competitors. The fast food chain believes that the its business is only as strong as its staff.

In many ways, the Chipotle burrito is very similar to the iPhone. Founder Steve Ells invented a way to maintain the basic speed and experience of the standard fast-food experience and make the quality of the food a little better. The better food costs a bit more money, but consumers turn out to be happy to pay a premium for a superior product. Chipotle stands out for some unusual process innovations as well. Their “barbecued” meat products—carnitas and barbacoa—are vacuum-packed and cooked sous-vide in Chicago before being shipped out for on-site reheating.

     Each worker is responsible for one or two steps and then hands the package off to the next. The production inputs—rice, beans, meat, salsas—are assembled backstage and delivered at the command of the line workers. It’s not glamorous work or well paid, but it does offer a chance at advancement. The overwhelming majority of salaried managers were promoted from hourly wage jobs, and the best managers are further promoted to become “restaurateurs,” a kind of supermanager who oversees multiple stores. Wages for line cooks, meanwhile, would presumably rise if the unemployment rate fell. Under the circumstances, faster and better food is a great strategy for winning the future.

Ch. 10 - Product Concepts

        In this chapter we review different concepts of a product, as well as Branding. Chipotle has a firm grasp on one of our most important brand makers: Millennials. Millennials believe in what Chipotle stands for: Community. And based on that insight, the brand has consistently created a way for its customers to explore their interest in “food with a conscience,” making what could be tedious and preachy into an ongoing dialogue and movement that is both socially conscious and good for the palette. Leveraging the Chipotle brand in these new concepts will play very well with Millennials who drive a disproportionate share of margin for the franchise and vote not just with their visits, but with their likes, follows, tweets and Instagrams. Starting with Millennials and cascading from these new concepts will accelerate their growth potential, quickly.

        

     Chipotle has also been very creative as far as packing their products. They in the beginning of last summer a new line of oddly literary packaging—bags and cups printed with new writing both from authors you might find in the New Yorker as well as comedians like Sarah Silverman.Instead of limiting the topics to food or sustainability, both themes the company has focused on in the past, and ultimately decided to let authors write about whatever they wanted.

     The project was the brainchild of author Jonathan Safran Foer, who happened to eat lunch in a Chipotle restaurant one day by himself, and started wishing he had something to read. He knew people at the company—who'd reached out after Foer wrote Eating Animals, a book about factory farming—and decided to suggest his idea: What if Chipotle’s packaging was more like a book or a magazine? If customers like the new packaging, the company plans to roll out another lineup of writing soon. The soda cup may be the next literary form.

Ch. 17 - Personal Selling and Sales Management

One of Chipotle Mexican Grill’s founding principles is to serve “food with integrity.” So it comes as no surprise that quality customer service is an important part of the company’s mission. With 1,300+ locations, Chipotle is one of the fastest-growing restaurant companies in the United States. That type of rapid growth can make consistently great customer interactions a challenge. Chipotle’s secret recipe: becoming a customer company.

Chipotle’s service team receives inquiries as diverse as suggestions for locations of new restaurants, feedback about service at a specific location, or detailed questions about food ingredients and preparation. The company tapped Salesforce when it needed a scalable solution to provide business insights, keep pace with its growth, and expand to address social media over time.

                                      

Using customer profiles, Chipotle maintains a record of all customer service inquires—from a variety of channels—for 360-degree customer views. “Although we have more than a thousand restaurants, we want each to be a part of the community it serves and every customer to know they’re important,” says Shannon Kyllo, Customer Service Manager. “Salesforce gives us a close understanding of our customers so we can better meet their needs and personalize their experiences in our restaurants.”

Integration with back office systems for reporting is also important. “In addition to engaging with customers, it’s critical that we can identify trends as they develop,” explains Kyllo. “For example, if we get a lot of positive feedback in one area, it may be due to an exemplary district manager. Or if we get several complaints about an ingredient, there may be an issue with the supplier that we need to investigate.”

        Consumers are increasingly taking to social networks to share their opinions about their dining experiences—both positive and negative. Chipotle has a new team that is entirely devoted to listening to conversations about its brand and building even closer connections to customers. “As social media becomes the primary platform for customers to share their experiences and feedback, we are constantly evolving our communication model so we can connect with our customers in the ways that are most relevant for them,” explains Eric Wilson, Director of Initiatives. “Our service model is built on creating relationships with our customers—that’s always our top priority.”

Ch. 16 - Advertising, Public Relations and Sales Promotion

   Chipotle believes on the type of grand experiment that makes most brand managers tremble: It's giving up on advertising. Having cycled through four ad agencies in five years, the restaurant chain focus now mostly on word-of-mouth promotions.

       Chipotle has been adopting this plan since 2010, and according to numbers it has been working out very well.  In fact, not advertising on TV is key to Chipotle's business model. The company spends almost nothing on advertising—just $6 million nationwide last year. (By comparison, Arby's, the smallest of the large fast-food chains, spends about $100 million and McDonald's, the biggest, spends more than $650 million.)

Chipotle has been reducing its above-the-line advertising costs in the last few years.The company did advertise on TV for the first time ever in 2011, buying a single ad during the Grammy Awards that ran only once, for instance. But In its annual report, Chipotle describes why it believes advertising is bad for its business:  "Our marketing has always been based on the belief that the best and  most recognizable brands aren’t built through advertising or promotional campaigns alone, but rather through all of the ways people experience the brand."

Sales at Chipotle went up 20 percent last few years, so this is a company that already has momentum. The fact that its ad dollars are less effective than they should be suggests it's worth cutting them back -- they're a drag on earnings and they're not contributing efficiently to the company's overall growth.

Ch. 14 - Marketing Channels and Retailing

I walked into Chipotle Mexican Grill restaurant on the corner of 8th ave. and 56th street and one thing immediately becomes clear: This doesn't look like all those other places.That look is no accident. The distinctive Chipotle design--a spare, industrial motif marked by concrete floors, exposed piping, natural colors and ample use of plywood and stainless steel reflects a company culture that champions the basics. And all of the 1500 locations have the same look. 

When Ells opened the first Chipotle 20 years ago in Denver, he was determined to make the 880-square-foot restaurant's design as transparent as its service. That he had raised just $85,000 to start his business surely contributed to the ultimate industrial look. They had to make use of some very basic materials but have those materials speak to this brand that was being created. 

At Chipotle customers order from a pared-down menu of tacos and burritos, then watch the kitchen staff prepare their meal from fresh, sustainably raised ingredients. Each ingredient is laid out in front of the costumer so you can choose the perfect combination to make the preferred meal. You can watch the process as the burrito, bowl, tacos, or salad is prepared exactly the way the costumer ask for and it is handed out almost instantly. They don't say on the menu board that they have fresh guacamole, as a customer, you can see it being made right in front of you.

At Chipotle you won't find signs telling you where to stand in line or pay for your meal, essential qualities in tight urban locations. Thoughtfully considered elements include a combination of stools for quick bites and tastefully lit banquettes that encourage lingering.

The sounds, the smells, and the sights of cooking can really help you work up an appetite. Unfortunately in a lot of restaurants the “cooking” they do is more like putting together a science experiment. To that end, each Chipotle is designed with a kitchen that’s open to the entire restaurant. Overall, Chipotle definitely offers a unique fast service dining experience. 

CH 6. - Consumer Decision Making

     Companies should not fool themselves into believing that everyone wants to hear a green marketing message. Chipotle fully understands that the three most important factors in the consumer decision-making process for its products are price, taste and location. If it doesn’t get these factors right, then nothing else will matter.   

     In general, studies have found that millennials ages 18 to 34 do have higher expectations for ethical behavior by the companies with which they do business and are more receptive to green marketing messages. However, even among millennials, about one-third of this segment reports that, there are too many causes and it’s overwhelming, and, words like “green,” “eco,” “natural” and “sustainable” are so overused that they are almost meaningless.

     According to The Intelligence Group’s “Cassandra Report,” which studies the habits of the millennial generation, more than 60% of millennials report that they want brands that follow ethical practices and align with social causes. However, only 9% often make an effort to buy green products, while 36% report that they rarely or never make an effort to buy green products, according to “An Examination of Marketing Techiniques That Influence Millennials’ Perceptions of Whether a Product is Environmentally Friendly,” published in the Journal of Strategic Marketing. Therefore, green marketing messaging should be targeted at a narrow segment of the population as a whole, and such messages appear to be better received by a subsegment of the millennial demographic overall. 

     Espey says that only an estimated 5% of Chipotle’s customers have any significant depth of knowledge about the company’s Food With Integrity efforts. While Chipotle is devising marketing efforts to improve those awareness levels, the company understands the constraints and is not deluded to think that it can change this dramatically. 

     However, it may be more likely that those customers who do learn about sustainability efforts will become brand evangelists with high word of mouth activity. Chipotle reaches out to these customers through extensive use of social media including Twitter, Facebook and YouTube to spread its green message. The company’s Facebook page has received more than 2 million ‘likes.’  

     Chipotle also has “student brand managers,” on-campus brand ambassadors who are dedicated to “changing the way people think about and eat fast food” through grassroots marketing efforts aided by a local Chipotle marketing rep. Seeking permission to have a deeper and more intimate conversation with these key customers has the potential to significantly increase overall awareness and importance of sustainable food production issues among Chipotle’s customers and, in turn, build a significant cult-like following among the company’s most loyalty customers.

Developing a Global Vision

   Global Marketing is defined as marketing that targets markets throughout the world. Many Firms have the long term goal of establishing international markets to futher expand the buinesses worldwide. With this mindset Global Vision comes into play.
   Companies such as Chipotle Mexican Grill, have been fortunate to be able to start of in one location and branch of to other locations and eventually expand into international markets. Chipotle restaurants are located in a variety of places around the world including the United States, United Kingdom and Canada.
   Culture is a very integral part of the business as the company prides itself on its natural ingredients, responsible farming, and recycling. Chipotle's bags and napkins are 100 % paper recycled.
   Global Vision means recognizing and reacting to international marketing opportunities, using effective global marketing startegies, and being aware of threats from foreign competitors in all markets.

The Marketing Environment

    Chipotle Mexican Grill is a unique eatery. In a world of fast food and a lack of true consideration of consumer health, the restaurant pursues a different direction. The company positions itself as fast-casual food. This new, up-and-coming breed of dining commits itself to the customer time constraints as well as a positive environment. Customers can obtain their food in a short period of time, but can enjoy the more sophisticated atmosphere of the restaurant if they choose to stay and eat at the restaurant itself. Every Chipotle Mexican Grill is decorated with metal and light wood although every restaurant is unique in its set up. With this color scheme, the restaurant conveys a modern attitude to its customers.

Beyond its elegance in comparison to most, if not all, fast food establishments, Chipotle offers a level of customization to its meals in a simple manner. Although their menu only technically consists of three options (burrito, tacos, burrito bowl), Chipotle offers consumers over 65,000 combinations.  This is accomplished through their cafeteria line of ingredients including various meats, salsas, and extras like cheese and corn. Thus, at Chipotle, everyone can get exactly what they want in the way that they want it all while remaining different and unique from their friends who accompany them.

Ethics and social responsibility

  Chipotle is a company based on integrity. Integrity is about being real and being honest. It means doing the right thing even when no one is watching. These values permeate the way we do, and do not do, business.

  You are expected to use good judgment, adhere to high ethical standards, and avoid situations that create an actual or perceived conflict between your personal interests and those of Chipotle. Chipotle requires that the transactions you participate in are ethical and within the law, both in letter and in spirit. When in doubt, consult with your Manager/Director or the People Support Department. They will determine if a conflict exists and establish controls to prevent abuse or, if such control is not feasible, they may require that you terminate the activity in question or divest your interest in any relevant transaction. No matter what, each of us must accept personal responsibility for doing the right thing.

  Conflicts of interests or unethical behavior may take many forms. In the simplest terms, you should act for the long-term benefit of our customers and Chipotle, never for personal gain, or to favor family or friends. What follows are some of the key principles of ethical and conflict-free conduct. There is no way to develop a single set of rules to cover all situations. Rather, this policy outlines basic guidelines for ethical behavior at Chipotle. It does not replace good judgment.

  Just as important as the ethic concerns, Chipotle also cares about the social and environmental responsibilities of the business. Corporations of any size should give back to the community they operate in, in one way or another. A great example of this is Chipotle’s initiative to support local family farms. 
Good business means participating in value adding actions. You should never expense dollars on something that will not add value, either directly or indirectly, to your company. When it comes to performing a social good, many companies feel a pressure from society and therefore create campaigns out of reaction. Their justification is image-based and in many cases does produce value, only on a shallow level and for a short-lived time span.
  Chipotle’s investments in local farms is a great example of social responsibilities. This isn’t just a campaign to put Chipotle in a good light with the public, but it bolsters small farms that grow fresh produce and in turn creates value adding relationships with these food chains. Chipotle has pledged to use 10 million pounds of local produce while initiating a marketing campaign to inform consumers of the “disappearing” small family farm. This not only helps these small farms (the social good), but it creates a sustainable relationship between business and supplier, gives Chipotle some camera time, and allows them to continue to cook great food using fresh ingredients. 

Strategic Planning for Competitive Advantage

     Within the text the marketing plan elements are discussed in debt and explains how a strategic plan can help protect and grow the firms resources.  We dive further into how to fully execute a companies mission statement  and discuss the importance of strategic planning and having a competitive advantage.

     Strategic Planning is the managerial process of creating and maintaining a fit between the organizations objectives and resources and the evolving market opportunities. 

     A Competitive Advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. It is a factor or factors that causes customers to patronized a firm and not the competition. There are three types of competitive advantage. These different types are cost, product/service differentiation, and niche.

     Companies like Chipotle Mexican Grill have a diverse menu that caters to the needs and wants of the consumer. Many customers love chipotles diverse menu options that let the consumer mix and match thier meals to their liking. This comes in handy especially for when it comes to respecting cultures around the world for example some consumers do not eat pork due to relgious reasons. This is an advantage that chipotle has against its competitors, the option to choose what meat or form of meal the consumer prefers.

Chipotle Grill Inc. Mission Statement

The company has released a mission statement called Food with Integrity, which highlights its efforts in using organic ingredients, and serves more naturally raised meat than any other restaurant chain. Chipotle is one of the first chains of fast casual dining establishments.  Created by Chef Steve Ells, who trained at the Culinary Institute of America and later worked at the San francisco gourmet restaurant Stars under Jeremiah Tower, the restaurant was inspired by the many taquerias of the city's Mission District.  

Brief history of Chipotle Mexican grill, Inc.

Chipotle Mexican Grill, Inc. is one of the leading fast-casual Mexican restaurant chains, with approximately 400 outlets in about 20 states, mainly in the West and Midwest. Known for its fresh, gourmet, and increasingly organic ingredients, Chipotle offers a fairly simple menu of burritos, fajitas, and tacos featuring pork, shredded beef, chicken, steak, and vegetarian fillings. Customer checks average about $8.50. From a single location in Denver, Colorado, in 1993, the chain is now growing at the rate of 100 new restaurants per year thanks to the deep pockets of its parent, fast-food giant McDonald's Corporation. McDonald's first invested in the company in 1998, before taking majority control the following year, and it now holds a 90 percent stake. The vast majority of Chipotle restaurants are company-owned; fewer than ten are franchised. Annual revenues per unit are an estimated $1.2 million.